In such a time of economic hardships, buying a property at once with your life savings might be risky because life is full of surprises; you never know what tomorrow holds.
However, at Mirembe Villa-Kigo, one can buy a property of his or her choice without spending all his/her savings but through a mortgage.
But what is a mortgage? How is it done, who is legible and who is not?
In an interview with Watchdog Uganda, Mirembe Villas’ Senior property consultant, Derrick Musasizi explained that a mortgage is a loan that is given particularly to people that want to acquire real estate property (In Uganda specifically mortgage work on residential properties). Mortgages are offered by banks, not money lenders and are given in different categories after identifying who is eligible to acquire them.
“Who is eligible to acquire a mortgage ? In most cases, one must be having the house available, once the house is available, the bank evaluates the value of this house in accordance to location, properties of the house in question, acreage, etc. So once this value is attached to the house regardless of the selling price, the bank also evaluates the person applying for the mortgage (this is done through bank statements and other properties one might be having). After those two series of evaluations, one can access a mortgage or not depending on his or her value.”
Mr. Musasizi noted that after attaining a mortgage one is given a repayment schedule of how much they will be paying every month and how long it will take them to pay off the mortgage. The other most important aspect of the mortgage is ‘interest’ and surprisingly currently in Uganda mortgage interests are so high ranging from 17.5 per cent ( the lowest bank) to 21 or 22 per cent per annum.
“In other developed countries for example in the Western world, you are evaluated before actually looking at the house you want to buy and from that evaluation, you know how much the bank can give you and once you know how much the bank can give you that automatically sends you to a particular location where you can acquire a house. Also, people must know that there is no bank that can fully pay up your mortgage. You can’t get a loan that will finance 100 per cent of the purchase of your house, usually, one is required by the bank to make a deposit of 20-30 per cent of the purchase price. The best the bank can do is to foot the 80 or 70 per cent.”
However according to Mr Musasizi, in most cases especially in low-developed countries Uganda inclusive, most people go for mortgages that are heavier than their financial muscles because they want to buy houses that don’t fall in their range of income flow; that is why Mirembe Villas came in with the payment plan with consultants that amicably talk to their clients and go for the house that they will manage to pay in time without inconveniences.
“When the project was just starting, we were giving our clients a period of 36 months to pay off the house, after an initial deposit of USD10,000 regardless of the house one is buying. This USD10,000, ideally the purpose was to secure two things for the client; to secure the current price because with real estate, prices change upwards. So after the USD10,000, the client is given a period of 30 days to bring the initial deposit from the booking fee, the initial deposit is usually 10 per cent of the price one is taking,” he said.
He added that since the project currently is in the finishing phase, clients are now given 24 monthly payment plans and it’s at zero interest.
How a client buying a house at Mirembe Villas-Kigo accesses a mortgage:
According to Mr Musasizi, a client is required to first visit the site to appreciate and make due diligence.
“After visiting the site, you pick a house that you might be interested in, then we help you with the paperwork from our site and in most cases filling in an application form (it entails every detail of the client).We normally attach the client’s ID or passport.”
He added that after negotiations are done in terms of which house the client is taking and at what price and how one is planning to pay, a pre-sales contract is drafted for the client. The pre-sales contract is valid up to when the client pays 30 per cent of the house’s purchasing price to which they sign a form of the sales contract. He asserts that such documents are very vital for clients trying to negotiate with a bank to secure a mortgage.
“Because they will definitely need a commitment from you which the pre-sales contract holds. These documents will be presented before the banks for an assessment for further process for a client to attain a mortgage. Many of our clients have used Mortgages to secure their houses, we have mortgages that have come through Housing Finance Bank. In a particular case scenario this customer was supposed to pay up to 60 per cent because his house was customized. He paid it in a period of 18 months and the 40 per cent was paid by the bank,” Mr. Musasizi said.
“Other scenarios we have is the clients that work with the UN and have their bank facility of a sort which also gives mortgages to its employees, so the client pays 20 per cent and the 80 per cent is paid by their bank facility and we have had very many successful stories, especially from international banks.”
According to Mr Musasizi, mortgaging has also contributed 35 per cent in the facilitation of buying off the houses in Mirembe Villas-Kigo.
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